Here's What To Make Of Packaging Corporation of America's (NYSE:PKG) Decelerating Rates Of Return

Simply Wall St.11-14

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an...

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Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an...</p>\n\n<a href=\"https://finance.yahoo.com/news/heres-packaging-corporation-americas-nyse-171130054.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"NYSE","symbol_name":"纽交所","start_time":0,"source_url":"https://finance.yahoo.com/news/heres-packaging-corporation-americas-nyse-171130054.html","article_id":"2483832340","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/JDCC9lQeiIPM8JBfzfSUTg--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/d87d808830e2aedc066b03f242222480"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2483832340","pubTimestamp":1731517890,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Did you know there are some financial metrics that can provide clues of a potential multi-bagger?Firstly, we'd want to identify a growing return on capital employed  and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. In light of that, when we looked at Packaging Corporation of America  and its ROCE trend, we weren't exactly thrilled.For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Packaging Corporation of America:. Return on Capital Employed = Earnings Before Interest and Tax  ÷ . Therefore, Packaging Corporation of America has an ROCE of 15%. In absolute terms, that's a satisfactory return, but compared to the Packaging industry average of 8.8% it's much better.Check out our latest analysis for Packaging Corporatio","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":["rate"],"viewcount":null,"language":"en","relate_stocks":{"NYSE":"纽交所","PKG":"美国包装公司"},"translate_title":"以下是对美国包装公司（纽约证券交易所股票代码：PKG）回报率下降的看法","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"NYSE":1,"PKG":1},"content_text":"Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. Ultimately, this demonstrates that it's a business that is reinvesting profits at increasing rates of return. In light of that, when we looked at Packaging Corporation of America (NYSE:PKG) and its ROCE trend, we weren't exactly thrilled. \n What Is Return On Capital Employed (ROCE)? \n For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. Analysts use this formula to calculate it for Packaging Corporation of America: \n Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) \n0.15 = US$1.1b ÷ (US$8.8b - US$1.1b) (Based on the trailing twelve months to September 2024).\n Therefore, Packaging Corporation of America has an ROCE of 15%. In absolute terms, that's a satisfactory return, but compared to the Packaging industry average of 8.8% it's much better. \n Check out our latest analysis for Packaging Corporation of America \n\n\n\n  NYSE:PKG Return on Capital Employed November 13th 2024\n \n\n Above you can see how the current ROCE for Packaging Corporation of America compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Packaging Corporation of America . \n So How Is Packaging Corporation of America's ROCE Trending? \n Over the past five years, Packaging Corporation of America's ROCE and capital employed have both remained mostly flat. This tells us the company isn't reinvesting in itself, so it's plausible that it's past the growth phase. With that in mind, unless investment picks up again in the future, we wouldn't expect Packaging Corporation of America to be a multi-bagger going forward. This probably explains why Packaging Corporation of America is paying out 44% of its income to shareholders in the form of dividends. Unless businesses have highly compelling growth opportunities, they'll typically return some money to shareholders. \n What We Can Learn From Packaging Corporation of America's ROCE \n In summary, Packaging Corporation of America isn't compounding its earnings but is generating stable returns on the same amount of capital employed. Yet to long term shareholders the stock has gifted them an incredible 147% return in the last five years, so the market appears to be rosy about its future. Ultimately, if the underlying trends persist, we wouldn't hold our breath on it being a multi-bagger going forward. \n Packaging Corporation of America does have some risks though, and we've spotted   1 warning sign for Packaging Corporation of America  that you might be interested in. \n For those who like to invest in solid companies, check out this free list of companies with solid balance sheets and high returns on equity. \nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"-1","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2483832340"}